CUSC Schedule 2 Exhibit 3, Construction agreement

SCHEDULE 2 EXHIBIT 3

DATED [ ] 200[1]

NATIONAL GRID ELECTRICITY TRANSMISSION PLC (1)

and

[ ] (2)

THE CONNECTION AND USE OF SYSTEM CODE

CONSTRUCTION AGREEMENT

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CONTENTS

Clause Title

1 Definitions, Interpretation and Construction

2 Carrying out of the Works

3 Delays

4 Commissioning Programme and Liquidated Damages

5 Approval to Connect/Energise/Become Operational

6 Independent Engineer

7 Becoming Operational

8 Compliance with Site Specific Technical Conditions

9 Credit Requirements

10 Event of Default

11 Termination on Event of Default

12 Term

13 CUSC

14 Disputes

15 Variations

16 Restrictive Trade Practices Act

Appendix B1 One Off Works

Appendix G Transmission Connection Asset Works

Appendix H Transmission Reinforcement Works

Appendix I User's Works

Appendix J Construction Programme

Appendix K Liquidated Damages

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Appendix L Independent Engineer

Appendix M Security Arrangements

Appendix N Third Party Works

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THIS CONSTRUCTION AGREEMENT is made on the [ ] day of [ ] 200[1]

BETWEEN

(1) National Grid Electricity Transmission plc a company registered in England with number 2366977 whose registered office is at 1-3 Strand, London, WC2N 5EH (“The Company”, which expression shall include its successors and/or permitted assigns); and

(2) [ ] a company registered in [ ] with number [ ] whose registered office is at [ ] (“User”, which expression shall include its successors and/or permitted assigns)

WHEREAS

(A) Pursuant to the Transmission Licence, The Company has prepared a Connection and Use of System Code (CUSC) setting out the terms of the arrangements for connection to and use of the National Electricity Transmission System and the provision of certain Balancing Services.

(B) The User has applied for [connection to] [and use of] [modification to its connection to] [or use of] the National Electricity Transmission System and pursuant to Standard Condition C8 of the Transmission Licence, The Company is required to offer terms in accordance with the CUSC in this respect or [specific recital to reflect that the Construction Agreement is an amendment of an existing signed offer pursuant to the CUSC amending documents]

(C) The Company and the User are parties to the CUSC Framework Agreement (being an agreement by which the CUSC is made contractually binding between the parties).

(D) Certain works are required as part of this offer as set out in this Construction Agreement.

(E) This Construction Agreement is entered into pursuant to the terms of the CUSC.

(F) This Construction Agreement has been prepared under the Connect and Manage Arrangements

NOW IT IS HEREBY AGREED as follows:

1.1. DEFINITIONS, INTERPRETATION AND CONSTRUCTION

Unless the subject matter or context otherwise requires or is inconsistent therewith, terms and expressions defined in Section 11 of the CUSC and in

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the Bilateral Connection Agreement have the same meanings, interpretations or constructions in this Construction Agreement.

"Authority" as defined in the CUSC.

“Bilateral Connection Agreement” the Bilateral Connection Agreement entered into between the parties on even date herewith.

"Bilateral Embedded Generation Agreement"

the Bilateral Embedded Generation Agreement entered into between the parties on even date herewith.

"Charging Date" the date upon which the Construction Works are first Commissioned and available for use by the User or if the Independent Engineer before, on or after the Commissioning Programme Commencement Date shall have certified in writing that the Transmission Connection Assets, are completed to a stage where The Company could commence commissioning and by such date the User’s Works shall not have been so certified then the date falling [ ] days after the date of such certification, provided that the Transmission Reinforcement Works Enabling Works are Commissioned and Seven Year Statement Works are completed as at that date. In the event that the Transmission Reinforcement Works Enabling Works are not so Commissioned and/or the Seven Year Statement Works are not so completed the Charging Date shall be the date on which they are Commissioned and/or completed as appropriate. [Exclude Seven Year Statement Works from this definition if they are not also Enabling Works]

“Commissioning Programme Commencement Date”

the date specified in the Construction Programme for the commencement of the Commissioning Programme or any substituted date fixed under the terms of this Construction Agreement

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“Commissioning Programme” the sequence of operations/tests

necessary to connect the User’s Works and the Transmission Connection Asset Works to the National Electricity Transmission System for the purpose of making the User's Works available for operation to be determined pursuant to Clause 2.10 of this Construction Agreement.

“Completion Date” [ ] or such other date as may be agreed in terms of this Construction Agreement for completion of the Construction Works.

“Connect and Manage Derogation”

the temporary derogation from the NETS SQSS available to The Company under Standard Condition C17 of the Transmission Licence and/or the Relevant Transmission Licensee under Standard Condition D3 of its transmission licence;

“Connected Planning Data” data required pursuant to the Planning Code which replaces data containing estimated values assumed for planning purposes by validated actual values and updated estimates for the future and by updated forecasts for forecast data items.

“Consents” in relation to any Works:- (a) all such planning and other

statutory consents; and (b) all wayleaves, easements, rights

over or interests in land or any other consent; or

(c) permission of any kind as shall be necessary for the construction of the Works and for commence-ment and carrying on of any activity proposed to be undertaken at or from such Works when completed.

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“Construction Programme” the agreed programme for the Works to be carried out by The Company and the User set out in detail in Appendix [J] to this Construction Agreement or as amended from time to time pursuant to Clauses 2.3 and 3.2 of this Construction Agreement.

"Construction Site" the site where the Transmission Connection Asset Works are being undertaken by or on behalf of The Company;

“Construction Works” the Transmission Connection Asset Works, Transmission Reinforcement Works Enabling Works, Seven Year Statement Works and One Off Works and such additional works as are required in order to comply with any relevant Consents relating to any such works but excluding for the avoidance of doubt any Third Party Works.

"Dispute Resolution Procedure” the procedure for referral to arbitration set out in Paragraph 7.4 of the CUSC.

“Enabling Works” those Transmission Reinforcement Works which are specified in Appendix H Part 1 to this Construction Agreement.

“Event of Default” any of the events set out in Clause 10 of this Construction Agreement as constituting an event of default.

“Final Sums” the amount payable by the User on termination of this Construction Agreement being the aggregate from time to time and for the time being of:- (1) all The Company Engineering

Charges arisen prior to the date of termination;

(2) fees, expenses and costs

(excluding costs on account of

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interest charges incurred by The Company) of whatever nature reasonably and properly incurred or due by The Company in respect of any part of the Construction Works and Wider Transmission Reinforcement Works carried out prior to the date of termination of this Construction Agreement;

(3) fees, expenses and costs properly

payable by The Company in respect of, or arising from the termination by it or any third party of any contract for or relating to the carrying out of any Construction Works and Wider Transmission Reinforcement Works provided it is negotiated on an arms length basis (including any such arising under the STC);

(4) a sum equal to the reasonable

costs of removing any Transmission Connection Assets and of making good the remaining Plant and Apparatus following such removal; and

(5) interest on any such amounts

from the date they were paid by The Company to the date of The Company’s invoice at 2% over Base Rate from time to time and for the time being.

Provided that no sum shall be due in respect of Final Sums in respect of fees, expenses and costs associated with (a) Seven Year Statement Works; and (b) Wider Transmission Reinforcement Works required for wider system reasons and specified in Part 2.2 of Appendix H.

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Any dispute as to the amount of Final Sums shall be referred to arbitration in accordance with the Dispute Resolution Procedure.

“Independent Engineer” the engineer specified in Appendix L to this Construction Agreement. Provided that:- (a) where the parties fail to agree on

a suitable engineer within 120 days of the date of this Construction Agreement; or

(b) where any Independent

Engineer appointed from time to time shall fail, refuse or cease to act in the capacity set out herein and no substitute engineer of suitable standing and qualification can be agreed by the parties within 30 days;

then such engineer as the President of the Institution of Electrical Engineers shall, on the application of either party, nominate shall be the Independent Engineer.

“Liquidated Damages” the sums specified in or calculated pursuant to Appendix K to this Construction Agreement.

“One Off Works” the works described in Appendix B1 to this Construction Agreement.

“Seven Year Statement Works” the works set out in Table B7 of the statement prepared by The Company pursuant to Standard Condition C11 of the Transmission Licence and issued by The Company in [ ] which in The Company’s reasonable opinion (and in the absence of the Connect and Manage Derogation) are required to be completed before the Completion Date to ensure that the National Electricity Transmission System complies with

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the requirements of Standard Condition C17 of the Transmission Licence and Standard Condition D3 of any Relevant Transmission Licensee’s transmission licence prior to the Connection of the User’s Equipment in terms of Clause 7.1 [or 7.2] of this Construction Agreement.

“Term” the term of this Construction Agreement commencing on the date hereof and ending in accordance with Clause 12.

“Third Party Works” the works to be undertaken on assets belonging to a party other than The Company and the User to enable it to provide or as a consequence of the connection to and\or use of the National Electricity Transmission System by the User as specified in Appendix N;

"Transmission Connection Assets"

the assets specified in Appendix A to the Bilateral Connection Agreement.

“Transmission Connection Asset Works”

the works necessary for construction and installation of the Transmission Connection Assets at the Connection Site specified in Appendix G to this Construction Agreement.

“Transmission Reinforcement Works”

those works other than the Transmission Connection Asset Works, Seven Year Statement Works and One Off Works, which in the reasonable opinion of The Company (and in the absence of the Connect and Manage Derogation) are all necessary to extend or reinforce the National Electricity Transmission System to ensure that the National Electricity Transmission System complies with the requirements of Standard Condition C17 of the Transmission Licence and Standard Condition D3 of any Relevant Transmission Licensee’s transmission

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system in relation to and prior to the connection of the User’s Equipment at the Connection Site and which are specified in Appendix H to this Construction Agreement where Part 1 is the works required for the User and Part 2 is the works required for wider system reasonsPart 1 is the Enabling Works and Part 2 is the Wider Transmission Reinforcement Works.

“User’s Works” those works necessary for installation of the User’s Equipment which are specified in Appendix I to this Construction Agreement.

“Wider Transmission Reinforcement Works”

those Transmission Reinforcement Works which are specified in Appendix H Part 2 to this Construction Agreement where Part 2.1 is works required for the User and Part 2.2 is works required for wider system reasons.

“Works” the Construction Works and the User’s Works.

Users in the capacity of a Directly Connected Power Station or Embedded Power Station (other than those who are a BELLA) insert the following

[Capacity Reduction Charge [where on interim methodology a

sum equal to the difference between a) the Cancellation Charge that would have been payable by the User had this Construction Agreement terminated in the Financial Year (or part of Financial Year) in which the User reduced its Connection Entry Capacity and\or Transmission Entry Capacity as appropriate and the User had not reduced it’s Connection Entry Capacity and\or Transmission

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Entry Capacity as appropriate and b) the Cancellation Charge that would have been payable in such Financial Year (or part of Financial Year) if such charge was calculated on the basis of the reduced Connection Entry Capacity and\or Transmission Entry Capacity.] or or [where on final sums -”Final Sums and as such subject to the provisions of Clauses [9.2 and 9.3 -if user meets credit rating] [9.6 and 9.7 - if user does not meet credit rating] of this Construction Agreement except that the Final Sums will be assessed by reference to those elements of the Construction Works and Wider Transmission Reinforcement Works for which Final Sums would otherwise be payable but which are no longer required as a result of a Notice of Reduction taking effect rather than on termination of this Construction Agreement”] ]

Notice of Intent the notice issued by The Company pursuant to Clause 7.4.4

[Notice of Reduction the notice issued by The Company pursuant to Clause 7.4.7 including a revised Appendix C specifying the revised Transmission Entry Capacity.]

Preliminary Request the request issued by The Company pursuant to Clause 7.4.1

[Reduction Fee the fee payable by the User to The Company in respect of the agreement to vary issued pursuant to Clause 7.4.9 such fee being calculated on the same basis as that set out in the Charging Statements as payable on a payment of actual costs basis in respect of a Modification Application.]

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Users in the capacity of a Directly Connected Distribution System where works are required in respect of a BELLA or a Relevant Embedded Medium Power Station or a Relevant Embedded Small Power Station insert the following [Developer Capacity the MW figure [for export] specified

in the Developer’s Data.]

[Capacity Reduction Charge the fees, expenses and costs (whether external or internal) paid, payable or incurred by The Company in respect of those elements of the Construction Works and Wider Transmission Reinforcement Works for which Final Sums would otherwise be payable but which are no longer required when a Notice of Reduction takes effect.]

[Developer Insert name address and registered number who is party to a BELLA with The Company or the subject of the Request for a Statement of Works.]

[Developer’s Data the information provided by the [Developer-BELLA] [User in respect of the Developer in the Request for a Statement of Works-relevant embedded medium\small power station] and set out in Appendix [P].]

[Developer’s Project the connection of a [xMW wind farm\power station to the User’s Distribution System at [ ]]

Notice of Intent the notice issued by The Company pursuant to Clause 7.4.4

[Notice of Reduction the notice issued by The Company pursuant to Clause 7.4.7 revising the Developer’s Capacity for this Construction Agreement and Appendix A to the BELLA.]

Preliminary Request the request issued by The Company pursuant to Clause 7.4.1

Reduction Fee the fee payable by the User to The Company in respect of the agreement to vary issued pursuant to

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Clause 7.4.9 such fee being calculated on the same basis as that set out in the Charging Statements as payable on a payment of actual costs basis in respect of a Modification Application.

2. CARRYING OUT OF THE WORKS

2.1 Forthwith following the date of this Construction Agreement (i) in respect of Connection Sites in England and Wales The Company and the User shall agree the Safety Rules and Local Safety Instructions to apply during the Construction Programme and Commissioning Programme; and (ii) in respect of Connection Sites in Scotland the User shall agree with the Relevant Transmission Licensee the Safety Rules and Local Safety Instructions to apply during the Construction Programme and Commissioning Programme. Failing agreement within three months of the date of this Construction Agreement the matter shall be referred to the Independent Engineer for determination in accordance with Clause 6 of the Construction Agreement.

2.2 Subject to Clauses 2.3 and 2.4 of this Construction Agreement forthwith following the date of this Construction Agreement The Company shall use its best endeavours to obtain in relation to the Construction Works, and the User shall use its best endeavours to obtain in relation to the User's Works, all Consents. Each shall give advice and assistance to the other to the extent reasonably required by the other in the furtherance of these obligations. Further, each party shall, so far as it is legally able to do so, grant to, in relation to Connection Sites in England and Wales, the other, or in relation to Connection Sites in Scotland, the Relevant Transmission Licensee, all such wayleaves, easements, servitude rights, rights over or interests (but not estates as regards land in England and Wales and not heritable or leasehold interests as regards land in Scotland) in land or any other consents reasonably required by the other or the Relevant Transmission Licensee in order to enable the Works to be expeditiously completed and to enable that other to carry out its obligations to the other under this Construction Agreement and in all cases subject to such terms and conditions as are reasonable.

2.3 The following additional provisions shall apply in respect of the Consents and Construction Works:-

2.3.1 All dates specified in this Construction Agreement are subject to The Company obtaining Consents for the Construction Works in a form acceptable to it within the time required to carry out the Construction Works in accordance with the Construction Programme.

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2.3.2 In the event of:-

(a) the Consents not being obtained by the required date; or

(b) the Consents being subject to conditions which affect the dates; or

(c) The Company wishing to amend the Construction Works to facilitate the granting of the Consents,

The Company shall be entitled to revise the Construction Works (and as a consequence Appendix A to the Bilateral Connection Agreement) and all dates specified in this Construction Agreement and the charges specified in Appendix B to the Bilateral Connection Agreement. For the avoidance of doubt such revisions shall be at The Company 's absolute discretion and the consent of the User is not required.

2.3.3 The User shall be regularly updated by The Company in writing or by such other means as the parties may agree as to progress made by The Company from time to time in the obtaining of relevant Consents pursuant to its obligations under Clause 2.2 or 2.3 of this Construction Agreement.

2.4.1 The User shall be liable to pay to The Company:-

(a) all The Company 's Engineering Charges accrued; and

(b) proper and reasonable out-of-pocket expenses incurred and/or paid or which The Company is legally bound to incur or pay

in seeking and obtaining the Consents the subject of Clause 2.2 of this Construction Agreement and any Consents in respect of the Wider Transmission Reinforcement Works excluding any costs associated with the Seven Year Statement Works and the works specified in Appendix H Part 2.2.

The User acknowledges these out of pocket ancillary expenses may include planning inquiries or appeals and the capital costs together with reasonable legal and surveyors costs of landowners or occupiers in acquiring permanent easements or other rights in respect of any electric line or underground cable forming part of the Transmission Connection Asset Works. This sum shall not include any capital costs incurred by The Company, in relation to Connection Sites in England and Wales, in the acquisition by it of the freehold of any land or any Relevant Transmission Licensee, in relation to Connection Sites in Scotland, in the acquisition by it of the feuhold of any land. The Company shall keep the User informed of the level of such

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charges and expenses being incurred. The User shall pay such sums within 28 (twenty eight) days of the date of The Company 's invoice therefor.

2.4.2 Paragraphs 11.2.3 to 11.2.5 of the CUSC relating to Consents shall apply to the Construction Agreement as if set out here in full.

2.5 Prior to the commencement of the Transmission Connection Asset Works the User shall have the right to terminate this Construction Agreement upon giving not less than 7 (seven) days notice in writing to The Company. In the event of the User terminating this Construction Agreement in terms of this Clause 2.5 the User shall in addition to the payments for which it is liable under Clause 2.4 hereof be liable to pay to The Company a sum equal to The Company 's estimate or if applicable revised estimate of Final Sums. The User shall pay such sums within 14 (fourteen) days of the date of The Company's invoice(s) therefor on termination where applicable The Company shall disconnect the User's Equipment at the Connection Site and:

(a) the User shall remove any of the User's Equipment on, in relation to Connection Sites in England and Wales, The Company’s or, in relation to Connection Sites in Scotland, Relevant Transmission Licensee's land within 6 months of the date of termination or such longer period as may be agreed between The Company or the Relevant Transmission Licensee (as appropriate) and the User; and

(b) in the case of Connection Sites in England and Wales, The Company shall remove and, in the case of Connection Sites in Scotland, The Company shall procure that the Relevant Transmission Licensee removes, any of the Transmission Connection Assets on the User’s land within 6 months of the date of termination or such longer period as may be agreed between The Company or the Relevant Transmission Licensee (as appropriate) and the User.

2.6 If the User fails to obtain all Consents for the User's Works having complied with the obligations in Clause 2.2 of this Construction Agreement the obligation on the User to complete the User's Works shall cease and the User may by written notice to The Company terminate this Construction Agreement whereupon the User shall in addition to the sums for which it is liable under Clause 2.4 hereof be liable to pay to The Company a sum equal to The Company 's estimate or if applicable revised estimate of Final Sums. The User shall pay such sums within 14 (fourteen) days of the date of The Company 's invoice(s) therefor and (where applicable) on termination The Company shall disconnect the User's Equipment at the Connection Site and;

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(b) in the case of Connection Sites in England and Wales, The Company shall remove and, in the case of Connection Sites in Scotland, The Company shall procure that the Relevant Transmission Licensee removes, any of the Transmission Connection Assets on the User’s land within 6 months of the date of termination or such longer period as may be agreed between The Company or the Relevant Transmission Licensee (as appropriate) and the User.

2.7 Both parties shall be entitled to contract or sub-contract for the carrying out of their respective parts of the Works (which in the case of The Company shall include work carried out by a Relevant Transmission Licensee or its contractors or sub-contractors). The User or any contractor on its behalf shall be responsible for commencing and for carrying out the User's Works to such stage of completion as shall render them capable of being Commissioned in accordance with the Construction Programme and The Company or any contractor on its behalf shall be responsible for commencing and carrying out the Construction Works to such stage of completion as shall render them capable of being Commissioned in accordance with the Construction Programme.

2.8 The parties shall continuously liaise throughout the Construction Programme and Commissioning Programme and each shall provide to the other all information relating to its own Works reasonably necessary to assist the other in performance of that other’s part of the Works, and shall use all reasonable endeavours to coordinate and integrate their respective part of the Works. There shall be on-site meetings between representatives of the parties at intervals to be agreed between the parties. Each party shall deliver to the other party a written report of progress during each calendar quarter within 7 days of the end of that quarter.

Users in the capacity of a Directly Connected Distribution System where works are required in respect of a BELLA or a Relevant Embedded Medium Power Station or a Relevant Embedded Small Power Station insert the following [“2.8 The parties shall continuously liaise throughout the Construction

Programme and Commissioning Programme and each shall provide to the other all information relating to its own Works reasonably necessary to assist the other in performance of that other’s part of the Works, and shall use all reasonable endeavours to coordinate and integrate their respective part of the

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Works. There shall be on-site meetings between representatives of the parties at intervals to be agreed between the parties. The User shall also provide to The Company such information as The Company shall reasonably request and which the User is entitled to disclose in respect of the Developer’s Project. Each party shall deliver to the other party where requested a written report of progress during each calendar quarter (including in the case of the User progress on the Developer’s Project to the extent that the User has such information and is entitled to disclose it) within 7 days of the end of that quarter.”]

2.9 During the period of and at the times and otherwise as provided in the Construction Programme and the Commissioning Programme The Company shall allow the User, its employees, agents, suppliers, contractors and sub-contractors necessary access to the Construction Site and the User shall allow The Company or, in the case of Connection Sites in Scotland, the Relevant Transmission Licensee and in either case their employees, agents, suppliers, contractors and sub-contractors necessary access to its site to enable each to carry out the Transmission Connection Asset Works and One Off Works or User's Works but not so as to disrupt or delay the construction and completion of the other’s Works on the said sites or the operation of the other’s Plant and Apparatus located thereon, such access to be in accordance with any reasonable regulations relating thereto made by the site owner or occupier.

2.10 Not later than six months prior to the Commissioning Programme Commencement Date The Company shall provide the User with a draft Commissioning Programme for the Commissioning of the Transmission Connection Assets, and the User's Equipment. The User shall, as quickly as practicable and in any event within three months of receipt thereof, determine whether or not to approve the proposed Commissioning Programme (which approval shall not be unreasonably withheld or delayed) and shall within such three month period either notify The Company of its approval or, in the event that the User reasonably withholds its approval, notify The Company of any changes or variations to the proposed commissioning programme recommended by the User. If The Company does not accept such changes or variations submitted by the User any dispute shall be referred to the Independent Engineer for determination. The Commissioning Programme agreed between the parties or determined by the Independent Engineer as the case may be shall be implemented by the parties and their sub-contractors in accordance with its terms.

2.11 If at any time prior to the Completion Date it is necessary for The Company or The Company in its reasonable discretion wishes to make any addition to

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or omission from or amendment to the Transmission Connection Asset Works and/or Transmission Reinforcement Works and/or the One Off Works and/or the Third Party Works The Company shall notify the User in writing of such addition, omission or amendment and Appendices [B1 (One Off Works), G (Transmission Connection Asset Works) H (Transmission Reinforcement Works) and N (Third Party Works)] to this Construction Agreement and consequently Appendices [A (Transmission Connection Assets) and B (Connection Charges and One Off Charges)] to the associated Bilateral Connection Agreement shall be automatically amended to reflect the change.

2.12 [The User shall apply to the Secretary of State for Trade and Industry as part of its application under Section 36 of the Act for its generating station, for deemed planning permission in relation to the substation forming part of the Transmission Connection Asset Works. The User shall use its best endeavours to procure that the said deemed planning permission is so obtained. The Company's obligations under Clause 2.2 of this Construction Agreement shall not require it to obtain planning consent for the said substation unless and until the Secretary of State for Trade and Industry shall for whatever reason refuse to deem the grant of planning permission in respect of the same. The User shall liaise with The Company as to its construction and operational requirements and shall ensure that the said application meets The Company's requirements. The Company shall provide the User with all information reasonably required by it in relation to the application and the User shall ensure that all requirements of The Company are incorporated in the application for deemed planning consent.]

2.13 [The Transmission Reinforcement Works Enabling Works are conditional on British Energy Generation Limited and/or Magnox Electric plc (as the case may be)granting approval to the carrying out of the Construction Works in terms of the Nuclear Site Licence Provisions Agreement being an agreement dated 30 March 1990 between The Company and Nuclear Electric plc (now called Magnox Electric plc) and an agreement dated 31 March 1996 between The Company and British Energy Generation Limited (and described as such). In the event of British Energy Generation Limited and/or Magnox Electric plc (as the case may be) not granting approval The Company shall be entitled to change the Construction Works, the Construction Programme and all dates specified in this Construction Agreement.]

2.14 [It is hereby agreed and declared for the purposes of the Construction (Design and Management) Regulations 1994 that the User is the only client in respect of the User's Works and The Company is the only client in respect of the Construction Works and Wider Transmission Reinforcement Works and each of the User and The Company shall accordingly discharge all the duties of clients under the said Regulations.]

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2.15 [The Company and the User hereby agree and acknowledge that this Construction Agreement is not to be treated as a construction contract within the meaning of section 104 of the Housing Grants, Construction and Re-generation Act 1996 and sections 104 to 113 of the said Act shall have no application either to the Construction Works or the User's Works and the parties’ rights and obligations with regard to matters of dispute resolution and payment procedures are as expressly set out herein.

2.16 Third Party Works 2.16.1 The User shall be responsible for carrying out or procuring that the Third

Party Works are carried out and shall carry them out or procure that they are carried out in accordance with the timescales specified in the Construction Programme. The User shall confirm to The Company or, where requested to do so by The Company, provide confirmation from the third party that the Third Party Works have been completed.

2.16.2 Given the nature of these works it may not be possible to fully identify the

works required or the third parties they relate to at the date hereof. Where this is the case The Company shall, subject to 2.x.3 below, advise the User as soon as practicable and in any event by [ ] of the Third Party Works and shall be entitled to revise Appendix N and as a consequence the Construction Programme as necessary to reflect this.

2.16.3 Where Third Party Works are likely to be Modifications required to

be made by another user(s) (“the “First User(s)”) as a consequence of Modifications to the National Electricity Transmission System to be undertaken by The Company under this Construction Agreement The Company shall as soon as practicable after the date hereof issue the notification to such First User’s in accordance with CUSC Paragraph 6.9.3.1. The User should note its obligations under CUSC Paragraph 6.10.3 in respect of the costs of any Modifications required by the First User(s).

2.16.4 In the event that the Third Party Works have not been completed by the date

specified in the Construction Programme or, in The Company’s reasonable opinion are unlikely to be completed by such date, The Company shall be entitled to revise the Construction Programme as necessary to reflect such delay and also, where The Company considers it necessary to do so, shall be entitled to revise the Construction Works (and as a consequence Appendices A and B to the Bilateral Connection Agreement). For the avoidance of doubt such revisions shall be at The Company's absolute discretion and the consent of the User is not required. Further, in the event that the Third Party Works have not been completed by [ ] The Company shall have the right to terminate this Construction Agreement upon giving notice in writing to the User and in this event the provisions of Clause 11 of this Construction Agreement shall apply.

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[2.17 Wider Transmission Reinforcement Works [2.17.1The Company shall keep the User advised as to progress on the Wider

Transmission Reinforcement Works and shall include information on these in the reports produced pursuant to Clause 2.8.

2.17.2.To the extent that the Wider Transmission Reinforcement Works other

than Wider Transmission Reinforcement Works specified in Part 2.2 of Appendix H are undertaken prior to the Completion Date sums associated with them shall form part of any Final Sums due on termination of this Construction Agreement on or before the Completion Date [and so will be included in the Bi-annual Estimate and Secured Amount Statement (as defined in Clause 9B.2).

3.3. DELAYS

3.1 If either party shall have reason to believe that it is being delayed or will be delayed in carrying out that party’s Works for any reason (whether it is one entitling it to the fixing of a new date under Clause 3.2 of this Construction Agreement or not) it shall forthwith notify the other party in writing of the circumstances giving rise to the delay and of the extent of the actual and/or anticipated delay.

3.2 If prior to the Completion Date a party (in this Clause 3.2 “the Affected Party”) shall be delayed in carrying out any of the Affected Party’s Works (including their commissioning) by reason of any act, default or omission on the part of the other Party (in this Clause the “Defaulting Party”) or the Defaulting Party’s employees, agents, contractors or sub-contractors or by reason of an event of Force Majeure, the Affected Party shall be entitled to have such later date or dates fixed as the Commissioning Programme Commencement Date and/or (as the case may be) the Completion Date as may be fair and reasonable in the circumstances provided that it shall have notified the Defaulting Party in writing of such act, default or omission or event of Force Majeure within 28 days of it becoming aware of the occurrence giving rise to the delay together with an estimate of the proposed delay which it will cause the Affected Party. In the event of a dispute between the parties over what is or are any fair and reasonable new date or dates to be fixed in the circumstances this shall be promptly referred to and determined by the Independent Engineer. Once the new date or dates are fixed the Construction Programme and/or Commissioning Programme shall be deemed automatically amended as appropriate.

4. COMMISSIONING PROGRAMME AND LIQUIDATED DAMAGES

4.1 Each party shall give written notice to the other declaring its readiness to commence the Commissioning Programme when this is the case.

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4.2 The Commissioning Programme shall commence forthwith once both parties have given written notice to the other under Clause 4.1.

4.3 The Works shall be deemed to have been Commissioned on the date that the Independent Engineer certifies in writing to that effect.

4.4 In the event that the actual date of commencement of the Commissioning Programme is later than the Commissioning Programme Commencement Date The Company (if and to the extent that it is responsible for delayed commissioning beyond the Commissioning Programme Commencement Date, such responsibility and/or its extent to be determined by the Independent Engineer failing agreement between the parties) shall be liable to pay to the User Liquidated Damages for each day that the actual date of commencement of the Commissioning Programme is later than the Commissioning Programme Commencement Date. It is declared and agreed that such Liquidated Damages shall cease to be payable in respect of any period after the date of actual commencement of the Commissioning Programme.

4.5 In the event that the actual date on which the Construction Works are Commissioned is later than the Completion Date The Company (if and to the extent that it is responsible for delayed completion beyond the Completion Date, such responsibility and/or its extent to be determined by the Independent Engineer failing agreement between the parties) shall be liable to pay to the User Liquidated Damages for each day that the actual date on which the Construction Works are Commissioned is later than the Completion Date. It is hereby agreed and declared that such Liquidated Damages shall cease to be payable in respect of any period after completion of the Construction Works.

4.6 Liquidated Damages payable under Clauses 4.4 and 4.5 of this Construction Agreement shall accumulate on a daily basis but shall be payable calendar monthly. On or before the 15th day of each month the party entitled to receive the payment of Liquidated Damages shall send to the other party a statement of the Liquidated Damages which have accrued due in the previous calendar month. The party receiving such statement shall in the absence of manifest error pay the Liquidated Damages shown on the statement within 28 days of the date upon which the statement is received.

4.7 Without prejudice to and in addition to the obligation of the User pursuant to Clause 2.4 of this Construction Agreement, the payment or allowance of Liquidated Damages pursuant to this Clause 4 shall be in full satisfaction of The Company's liability for failure to perform its obligations by the Commissioning Programme Commencement Date and/or the Completion Date as appropriate.

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4.8 In the event that the User shall have failed, in circumstances not entitling it to the fixing of a new date as the Commissioning Programme Commencement Date pursuant to Clause 3.2, to complete the User's Works by [ ] to a stage where the User is ready to commence the Commissioning Programme, The Company shall have the right to terminate this Construction Agreement upon giving notice in writing to the User. In the event of such termination the User shall in addition to the amounts for which it is liable under Clause 2.4 to this Construction Agreement be liable to The Company to pay to The Company a sum equal to The Company's estimate or revised estimate of Final Sums. The User shall pay such sums within 14 (fourteen) days of the date of The Company 's invoice(s) therefor and on termination (where applicable) The Company shall disconnect the User's Equipment at the Connection Site and:


(b) in the case of Connection Sites in England and Wales, The Company shall remove and, in the case of Connection Sites in Scotland, The Company shall procure that the Relevant Transmission Licensee removes, any Transmission Connection Assets on the User’s land within 6 months of the date of termination or such longer period as may be agreed between The Company or the Relevant Transmission Licensee (as appropriate) and the User.

5. APPROVAL TO CONNECT/ENERGISE/BECOME OPERATIONAL

5.1 Not later than 4 months prior to the expected Commissioning Programme Commencement Date or by such other time as may be agreed between the parties the parties shall prepare and submit the Operation Diagrams required to be prepared and submitted by each of them respectively under CC 7.4.7 and 7.4.10 and likewise the Site Common Drawings required under CC 7.5.2 and 7.5.4 and, if necessary, Gas Zone Diagrams referred to in CC 7.4.9 and 7.4.12.

5.2 Not later than 3 months prior to the expected Commissioning Programme Commencement Date or by such other time as may be agreed between the parties the parties shall prepare and submit the Operation Diagrams required to be prepared and submitted by each of them respectively under CC 7.4.8 and 7.4.11 and likewise the Site Common Drawings required under CC 7.5.3 and 7.5.5.

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5.3 Not later than 3 months prior to the expected Commissioning Programme Commencement Date or by such other time as may be agreed between the parties:-

5.3.1 each party shall submit to the other data within its possession needed to enable the completion of Appendices F3 and F4 to the Bilateral Connection Agreement; and

5.3.2 the User shall submit to The Company evidence satisfactory to The Company that the User's Equipment complies or will on completion of the User's Works comply with Clause 8 of this Construction Agreement and Paragraphs [1.3.3(b), 2.9 and 6.7] of the CUSC.

5.4 Not later than 8 weeks prior to the expected Commissioning Programme Commencement Date or by such other time as may be agreed between the parties each party shall submit to the other:

5.4.1 for the Connection Site information to enable preparation of Site Responsibility Schedules complying with the provisions of Appendix 1 to the Connection Conditions together with a list of managers who have been duly authorised by the User to sign such Site Responsibility Schedules on the User's behalf;

5.4.2 written confirmation as required under CC.5.2(g) that the list of Safety Co-ordinators are authorised and competent [and a list of persons appointed pursuant to Grid Code CC5.2(m)];

5.4.3 a list of the telephone numbers for the facsimile machines referred to in CC6.5.9.

5.5 If directly connected to the National Electricity Transmission System not later than 3 months prior to the expected Commissioning Programme Commencement Date each party shall submit to the other a statement of readiness to complete the Commissioning Programme in respect of the Works and the statement submitted by the User shall in addition contain relevant Connected Planning Data and a report certifying to The Company that, to the best of the information, knowledge and belief of the User, all relevant Connection Conditions applicable to the User have been considered and complied with. If The Company considers that it is necessary, it will require this latter report to be prepared by the Independent Engineer. The report shall incorporate if requested by The Company type test reports and test certificates produced by the manufacturer showing that the User's Equipment meets the criteria specified in CC6.

5.6 If embedded not later than 3 months prior to the Charging Date or by such other time as may be agreed between the Parties the User shall submit to The Company a statement of readiness to use the National Electricity

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Transmission System together with Connected Planning Data and a report certifying to The Company that, to the best of the information, knowledge and belief of the User:-

(i) all relevant Connection Conditions applicable to the User have been considered;

(ii) CC 6 insofar as it is applicable to the User has been complied with; and

(iii) the site-specific conditions set out in Appendices [F1, F3, F4] and [F5] to the Bilateral Embedded Generation Agreement have been complied with.

If The Company considers that it is necessary, it will require this report to be prepared by the Independent Engineer. The report shall incorporate if requested by The Company type test reports and test certificates produced by the manufacturer showing that the User's Equipment meets the criteria.

6. INDEPENDENT ENGINEER

The parties agree and shall procure that the Independent Engineer shall act as an expert and not as an arbitrator and shall decide those matters referred or reserved to him under this Construction Agreement by reference to Good Industry Practice using his skill, experience and knowledge and with regard to such other matters as the Independent Engineer in his sole discretion considers appropriate. All references to the Independent Engineer shall be made in writing by either party with notice to the other being given contemporaneously as soon as reasonably practicable and in any event within 14 days of the occurrence of the dispute to be referred to the Independent Engineer. The parties shall promptly supply the Independent Engineer with such documents and information as he may request when considering such question. The Independent Engineer shall use his best endeavours to give his decision upon the question before him as soon as possible following its referral to him. The parties shall share equally the fees and expenses of the Independent Engineer. The parties expressly acknowledge that submission of disputes for resolution by the Independent Engineer does not preclude subsequent submission of disputes for resolution by arbitration as provided for in the Dispute Resolution Procedure. Pending any such submission the parties shall treat the Independent Engineer’s decision as final and binding.

7. BECOMING OPERATIONAL

7.1 If directly connected to the National Electricity Transmission System The Company shall connect and Energise the User's Equipment at the Connection Site during the course of and in accordance with the

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Commissioning Programme and thereafter upon compliance by the User with the provisions of Clause 5 and provided (1) the Construction Works excluding the Seven Year Statement Works shall be Commissioned and (2) [the Seven Year Statement Works [delete Seven Year Statement Works under the Connect and Manage Arrangements if these are not Enabling Works] and the Third Party Works shall be completed The Company shall forthwith notify the User in writing that the Connection Site shall become Operational.

7.2 If Embedded upon compliance by the User with the provisions of Clauses 5.1, 5.2 and 5.3 and subject, if The Company so requires, to the Transmission Reinforcement Works Enabling Works [and/or works for the Modification] being carried out and/or the [New] Connection Site being Operational (any or all as appropriate) The Company shall forthwith notify the User ("Operational Notification") in writing that it has the right to use the National Electricity Transmission System. It is an express condition of this Construction Agreement that in no circumstances, will the User use or operate the User's Equipment without receiving the Operational Notification from The Company.

7.3 If, on completion of the User's Works in accordance with the terms of this Construction Agreement the Registered Capacity of the User's Equipment is less than [ ]MW, The Company shall automatically have the right to amend Clause 7 and Appendix C to the Bilateral Connection Agreement to reflect the actual Registered Capacity of the User's Equipment.

Users in the capacity of a Directly Connected Power Station or Embedded Power Station (other than those who are a BELLA) insert the following

[7.4 Transmission Entry Capacity Reduction

7.4.1 If, at any time prior to the Completion Date The Company reasonably believes from data provided by the User to The Company, the reports provided by the User pursuant to Clause 2.8 and Clause 5 of this Construction Agreement, the commissioning process under the Construction Agreement or otherwise that the User’s Equipment will be such that it will not be capable of exporting power onto the National Electricity Transmission System at the level of the Transmission Entry Capacity The Company shall advise the User accordingly in writing setting out its reasons for this belief, the source of the information giving rise to the concern and seeking clarification from the User.

7.4.2 The User shall respond to The Company within 15 Business Days of the date of the Preliminary Request providing such information or data as is necessary to satisfy The Company’s concerns set out in the Preliminary Request and making any amendments necessary to the report provided by

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the User pursuant to Clause 2.8 and / or data provided by the User to The Company to reflect this.

7.4.3 In the event that The Company is satisfied from the information provided in accordance with Clause 7.4.2 by the User that the User’s Equipment will be such that it will be capable of exporting power onto the National Electricity Transmission System at the level of the Transmission Entry Capacity The Company shall notify the User accordingly.

7.4.4 In the event that the User does not respond to the Preliminary Request or, notwithstanding the User’s response, The Company remains of the view that the User’s Equipment will be such that it will not reasonably be capable of exporting power onto the National Electricity Transmission System at the level of the Transmission Entry Capacity The Company shall inform the User in writing that it intends to amend Clause 7 and Appendix C to the [Bilateral Connection Agreement] [Bilateral Embedded Generation Agreement] to reflect the Transmission Entry Capacity that it reasonably believes to be the level of power that the User's Equipment will be capable of exporting .

7.4.5 The User shall respond to the Notice of Intent within 15 Business Days of the date of the Notice of Intent explaining why it still reasonably believes that its User's Equipment will be capable of exporting power onto the National Electricity Transmission System at the level of the Transmission Entry Capacity or at more than the MW figure proposed by The Company in the Notice of Intent or providing a reasonable explanation as to why this is not the case.

7.4.6 In the event that The Company is satisfied from the information provided in accordance with Clause 7.4.5 by the User that the User’s Equipment will be such that it will be capable of exporting power onto the National Electricity Transmission System at the level of the Transmission Entry Capacity The Company shall notify the User accordingly.

7.4.7 Where notwithstanding the User’s response to the Notice of Intent The Company remains of the view that the User’s Equipment will be such that it will not reasonably be capable of exporting power onto the National Electricity Transmission System at the level of the Transmission Entry Capacity or at more than the MW figure proposed by The Company in the Notice of Intent or the User does not provide a response that is satisfactory to The Company within the timescale specified in 7.4.5 above The Company will issue the Notice of Reduction to the User and will send a copy of the same to the Authority.

7.4.8 Unless during such period the matter has been referred by the User to the Authority for determination by the Authority under the provisions of Standard Condition C9 Paragraph 4 of the Transmission Licence, the

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Notice of Reduction shall take effect on the day 15 Business Days after the date of the Notice of Reduction and Appendix C of the [Bilateral Connection Agreement] [Bilateral Embedded Generation Agreement] shall be amended on that date in the manner set out in the Notice of Reduction. Where the matter has been referred the amendments to Appendix C of the [Bilateral Connection Agreement] [Bilateral Embedded Generation Agreement] and the date they take effect shall be as set out in the Authority’s determination.

7.4.9 After a Notice of Reduction has taken effect The Company shall be entitled to make such amendments to this Construction Agreement as it requires as a result of the reduction in Transmission Entry Capacity effected by the Notice of Reduction and as a consequence to the [Bilateral Connection Agreement] [Bilateral Embedded Generation Agreement]. The Company shall advise the User as soon as practicable and in any event within 3 months of the date of the Notice of Reduction (or if the matter has been referred by the User to the Authority for determination, the date of determination) of such amendments by way of offer of an agreement to vary the Construction Agreement and [Bilateral Connection Agreement] [Bilateral Embedded Generation Agreement]. This agreement to vary will also provide for payment by the User of the Capacity Reduction Charge and Reduction Fee where applicable. The parties acknowledge that any dispute regarding this variation shall be referable to and determined by the Authority under the provisions of Standard Condition C9 Paragraph 4 of the Transmission Licence.”]

Users in the capacity of a Directly Connected Distribution System where works are required in respect of a BELLA or a Relevant Embedded Medium Power Station or a Relevant Embedded Small Power Station insert the following [7.4 Developer Capacity Reduction

7.4.1 If, at any time prior to the Completion Date The Company reasonably believes from the reports provided by the User pursuant to Clause 2.8 and Clause 5 of this Construction Agreement [in the case of relevant embedded small\medium power stations – and\or CUSC Paragraphs 6.5.8 or 6.5.5.11], the commissioning process generally or otherwise that the Developer’s Equipment will be such that it will not be capable of generating at the Developer Capacity, The Company shall advise the User accordingly in writing setting out its reasons and seeking clarification of the position from the User.

7.4.2 The User shall respond to The Company within 15 Business Days of the date of the Preliminary Request providing such information or data as is necessary to satisfy The Company’s concerns set out in the Preliminary Request and making any amendments necessary to the report provided by

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the User pursuant to Clause 2.8 and /or data provided by the User to The Company to reflect this.

7.4.3 In the event that The Company is satisfied from the information provided in accordance with Clause 7.4.2 by the User that the Developer’s Equipment will be such that it will be capable of generating at the Developer Capacity The Company shall notify the User accordingly.

7.4.4 In the event that the User does not respond to the Preliminary Request or, notwithstanding the User’s response, The Company remains of the view that the Developer’s Equipment will be such that it will not reasonably be capable of generating at the Developer Capacity , The Company shall inform the User and the Developer in writing that it intends to amend the Developer Capacity in this Construction Agreement [and the associated BELLA] to reflect the whole MW figure that it reasonably believes the Developer's Equipment will be capable of generating at.

7.4.5 The User shall respond to the Notice of Intent within 15 Business Days of the date of the Notice of Intent explaining why it still reasonably believes that the Developer's Equipment will be capable of generating at the Developer Capacity or at more than the MW figure proposed by The Company in the Notice of Intent or providing a reasonable explanation as to why this is not the case.

7.4.6 In the event that The Company is satisfied from the information provided in accordance with Clause 7.4.5 by the User that the Developer’s Equipment will be such that it will be capable of generating at the Developer Capacity The Company shall notify the User accordingly.

7.4.7 Where notwithstanding the User’s response The Company remains of the view that the Developer’s Equipment will be such that it will not be capable of generating at the Developer Capacity or at or at more than the MW figure proposed by The Company in the Notice of Intent or the User does not provide a response that is satisfactory to The Company within the timescale specified in Clause 7.4.5 above The Company will issue the Notice of Reduction to the User and the Developer and will send a copy of the same to the Authority.

7.4.8 Unless during such period the matter has been referred by the User to the Authority for determination by the Authority under the provisions of Standard Condition C9 Paragraph 4 of the Transmission Licence, the Notice of Reduction shall take effect on the day 15 Business Days after the date of the Notice of Reduction and the Developer Capacity in this Construction Agreement [and Appendix A of the associated BELLA] shall be amended on that date in the manner set out in the Notice of Reduction. Where the matter has been referred the amendments to Appendix A of the

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associated BELLA and the date they take effect shall be as set out in the Authority’s determination.

7.4.9 After a Notice of Reduction has taken effect The Company shall be entitled to make such amendments to this Construction Agreement as it requires as a result of the reduction in the Developer Capacity effected by the Notice of Reduction and as a consequence to the [Bilateral Connection Agreement or Agreement to Vary] [and BELLA]. The Company shall advise the User as soon as practicable and in any event within 3 months of the date of the Notice of Reduction (or if the matter has been referred by the User [and BELLA] to the Authority, the date of determination) of such amendments by way of agreement(s) to vary. The agreement to vary will also provide for payment by the User of the Capacity Reduction Charge and Reduction Fee. The parties acknowledge that any dispute regarding this variation shall be referable to and determined by the Authority under the provisions of Standard Condition C9 Paragraph 4 of the Transmission Licence.”]

7.4.10 Where as a result of the reduction in the Developer Capacity effected by the Notice of Reduction the Developer is no longer an Embedded Exemptable Large Power Station and as a result the BELLA is to be terminated as provided for in the BELLA then the following provisions shall apply:

7.4.10.1 The agreement to vary referred to in Clause 7.4.9 above shall also provide

for such amendments as are necessary to the Construction Agreement and [Bilateral Connection Agreement or Agreement to Vary] to reflect the fact that the Developer is no longer to be party to a BELLA but is a Relevant Embedded Small Power Station.

7.4.10.2 Where The Company determines that the reduction in the Developer

Capacity effected by the Notice of Reduction is such that if a Request for a Statement of Works had been made by the User on the basis of that reduced Developer Capacity on the same date as, but instead of, the Developer’s application for the BELLA then no works would have been required on the National Electricity Transmission System then The Company shall be entitled to terminate this Construction Agreement and the provisions of Clause 11 shall apply. In such case The Company shall be entitled to make such amendments as are necessary to the [Bilateral Connection Agreement or Agreement to Vary] to reflect the fact that the Developer is no longer party to a BELLA but is a Relevant Embedded Small Power Station.

7.4.10.3 The Company and the User shall treat the Developer as if it had been a

Relevant Embedded Small Power Station at the time of its application for a BELLA and for the purposes of CUSC Paragraph 6.5 as if a) the Developer’s application for the BELLA had been a Request for a Statement of Works under CUSC 6.5.5, b) this Construction Agreement had been entered into as a result of the Modification

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Application referred to in CUSC Paragraph 6.5.5.5, c) the Notice of Reduction is a revised Request for a Statement of Works from the User under CUSC Paragraph 6.5.5.8 by reference to the reduction in the Developer Capacity effected by the Notice of Reduction and d) the agreement to vary referred to in Clause 7.4.10.1 or 7.4.10.2 as The Company’s response to the User’s revised Request for a Statement of Works and the provisions of CUSC Paragraph 6.5 shall apply on that basis.

8. COMPLIANCE WITH SITE SPECIFIC TECHNICAL CONDITIONS

The User shall ensure that on the Completion Date the User's Equipment complies with the site specific technical conditions set out in Appendix F 1-5 to the Bilateral Connection Agreement .

9. CREDIT REQUIREMENTS

Alternate provisions apply depending whether or not the User does (9A) or does not (9B) meet The Company's required credit rating on signing the Construction Agreement. Details of the credit requirements are set out in the CUSC.

9A1 PROVISION OF SECURITY 9A.1.1 The User shall as soon as possible after execution of this Construction

Agreement and in any event no later than one (1) month after the date of such execution confirm to The Company whether it meets The Company Credit Rating. Thereafter not less than 75 days before 1 April and 1 October in each year until (subject to Clause 9A.4) 28 days after the Charging Date the User shall confirm its The Company Credit Rating to The Company (which in the case of a long term private credit rating shall be confirmed by Standard and Poor’s or Moody’s within a period of 45 days prior to the date of confirmation). The User shall inform The Company in writing forthwith if it becomes aware of losing its The Company Credit Rating or if it is or is likely to be put on credit watch or any similar credit surveillance procedure which may give The Company reasonable cause to believe that the User may not be able to sustain its The Company Credit Rating for at least 6 months.

9A.1.2In the event that the User has elected to provide The Company with an

indicative credit rating and The Company is of the reasonable opinion that the User has ceased to comply with the requirements of Clause 9A.1.1 then The Company may require the User forthwith:- (i) to apply to Standard and Poor’s and/or Moody’s for a further indicative

long term private credit rating; or

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(ii) to confirm to The Company that it shall provide the security referred to in Clause 9A.1.4 hereof.

9A.1.3 In the event of the User:-

(i) not having an The Company Credit Rating; or (ii) having a credit rating below The Company Credit Rating; or (iii) not having obtained from Standard and Poor’s or Moody’s within 30

days of the written notification under Clause 9A.1.2 above an indicative long term private credit rating,

or if The Company becomes aware that: (iv) the User ceases to have an The Company Credit Rating; or (v) the User is put on credit watch or other similar credit surveillance

procedure as specified above which may give The Company reasonable cause to believe that the User may not be able to maintain an The Company Credit Rating for at least 6 months; or

(vi) the User has not obtained from Standard and Poor’s within 30 days of the written notification by The Company under Clause 9A.1.2(i) above

a further indicative long term private credit rating, the User shall (where appropriate on receipt of written notification from

The Company) comply with the terms of Clause 9A.1.4.

9A.1.4 The User shall within 21 days of the giving of a notice under Clause 9A.1.3 or within 30 days of the User confirming to The Company under Clause 9A.1.2(ii) that it will provide the security specified below (whichever is the earlier), provide The Company with the security specified below to cover the User’s payment obligations to The Company arising in the event of, or which have arisen prior to, termination of this Construction Agreement. The security to be provided shall be in an amount not greater than such sums payable on termination and specified in writing by The Company to the User from time to time as appropriate. Such security shall be provided by way of:-

(i) an irrevocable on demand standby Letter of Credit or guarantee; or (ii) cash held in escrow [Escrow Account/ Bank Account]; or (iii) any other form included in The Company’s then current policy and

procedure

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such letter of credit or guarantee or security to be in a form agreed in writing by The Company and to be given by a Qualifying Bank, or Qualifying Company. Cash deposited in [escrow] shall be deposited with a Qualifying Bank. The choice of such security shall be at the discretion of the User.

9A.1.5 The User shall in addition to providing the requisite security enter into an agreement with The Company, which shall be supplemental to this Construction Agreement (the “Amending Agreement”). The Amending Agreement shall be in such form as The Company shall reasonably require and shall contain such provisions in relation to the User’s obligations to provide and maintain security as shall be consequential upon the requirement for security having arisen, in line with The Company’s then current provisions to the like effect in its agreements with other parties. The Amending Agreement shall relate to the procedures required in obtaining and maintaining the security and shall not alter or amend the amount of security required in terms of this Construction Agreement.

9A.1.6 In the event of The Company’s credit requirements being reviewed at any

time The Company shall advise the User in writing of the new credit requirements and the User shall within 30 days of such notification confirm in writing to The Company whether it wishes to enter into an Amending Agreement to reflect the new credit requirements. Thereafter if the User has confirmed it wishes to accept the new credit requirements The Company and the User shall within 30 days of such notification enter into an Amending Agreement.

9A.1.7 In the event that the facts or circumstances giving rise to the obligations of the

User to provide the security have ceased, then The Company shall release the security and provisions to that effect shall be included in the Amending Agreement.

Final Sums 9A.2 Within 60 days of the date of termination of this Construction Agreement

The Company shall:

(a) furnish the User with a further statement showing a revised estimate of Final Sums and will provide as soon as practicable evidence of such costs having been incurred; and

(b) by written notice to the User inform the User of all capital items which

cost The Company in excess of £10,000 and in relation to which an amount on account of Final Sums shall have been paid and whether The Company (1) wishes to retain the said capital items or (2) dispose of them.

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9A.3.1 In respect of all capital items which The Company wishes to retain (other than those which have been, or are proposed to be installed as a replacement for Transmission Plant and Transmission Apparatus) The Company shall forthwith reimburse to the User the amount paid by the User on account of Final Sums in respect of the said capital items (including without limitation the amount paid on account of the design, purchase, installation and testing of the said capital item and also associated construction works and interest charges) together with interest calculated thereon on a daily basis from the date of termination of this Construction Agreement to the date of payment at Base Rate for the time being and from time to time provided that in the event that The Company wishes to retain any capital item which has been installed but wishes to remove it to storage or to another site then it shall only reimburse to the User the cost of the capital item and not the costs of such installation and shall deduct from any reimbursement due to the User the costs of removal and/or storage.

9A.3.2 In respect of all capital items which The Company wishes to dispose (other

than those which have been, or are proposed to be installed as a replacement for Transmission Plant and Transmission Apparatus) it shall forthwith (and subject to The Company obtaining the consent of the Authority under Standard Condition B3 of the Transmission Licence if required and\or subject to any Relevant Transmission Licensee obtaining the consent of the Authority under Standard Condition B3 of its transmission licence) sell or procure the sale of the said capital item on an arms-length basis as soon as reasonably practicable. Forthwith upon receipt of the sale proceeds The Company shall pay to the User the proceeds received from any such sale together with interest thereon calculated on a daily basis from the date of termination to the date of payment at Base Rate for the time being and from time to time less any reasonable costs associated with the sale including the costs and expenses reasonably incurred and/or paid and/or which The Company is legally bound to pay on removing the capital item, any storage charges and any costs reasonably incurred by The Company in respect of reinstatement associated with removal of the capital item. The Company shall provide the User with reasonably sufficient evidence of all such costs and expenses having been incurred. If the Authority does not agree to the disposal of the capital item the capital item shall be retained by The Company and The Company shall reimburse the User the notional current market value in situ of the said capital item as between a willing buyer and a willing seller as agreed between the parties and failing agreement as determined by reference to arbitration in accordance with the Dispute Resol-ution Procedure together with interest thereon calculated on a daily basis from the date of termination of this Construction Agreement to the date of payment at Base Rate for the time being and from time to time.

9A.3.3 As soon as reasonably practicable after termination of this Construction

Agreement The Company shall provide the User with a statement of and invoice for Final Sums together with evidence of such costs having been

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incurred and/or paid and/or having been committed to be incurred. If the Final Sums are greater than the payments made by the User in respect of The Company’s estimate(s) of Final Sums the User shall within 28 days of the said statement and invoice prepared by The Company pay to The Company the additional payments due by the User together with interest calculated thereon on a daily basis at Base Rate for the time being and from time to time from the date of previous payment(s) sums equal to The Company’s estimate of Final Sums to the date of the statement of and invoice for Final Sums. If the Final Sums is less than the payments made by the User in respect of The Company’s estimate of Final Sums paid by the User following termination of this Construction Agreement The Company shall forthwith pay to the User the excess paid together with interest on a daily basis at Base Rate for the time being and from time to time from the date of payment of the fair and reasonable estimate of Final Sums to the date of reimbursement by The Company of the said excess paid.

9A.4 The obligations to provide security under this Clause 9A shall continue until

either all sums due under this Construction Agreement have been paid in full or security arrangements have been put in place by the User under the Bilateral Connection Agreement in accordance with Section 2 Part III of the CUSC. Until such time as the security arrangements are put in place in accordance with Section 2 Part III of the CUSC The Company shall be entitled to call upon the security put in place under the terms of this Construction Agreement for payment of Termination Amounts when due under the provisions of the CUSC.

Or 9B.1 Provision of Security 9B.1.1 The User hereby agrees that it shall forthwith upon the signing of this

Construction Agreement provide to The Company or procure the provision to The Company of, and the User shall until (subject to Clause 9B.8) 28 days after the Charging Date (unless and until this Construction Agreement shall be terminated and all sums due or which will or might fall due in respect of which security is to be provided shall have been paid) maintain or procure that there is maintained in full force and effect (including by renewal or replacement), a security arrangement from time to time and for the time being as set out in Appendix M hereto to provide security for the User’s obligation to pay The Company any and all sums specified by The Company in accordance with Clause 9B.2 of this Construction Agreement as requiring to be secured in respect of:-

(a) the User’s liability to pay The Company amounts from time to time

due under Clause 2.4 of this Construction Agreement; and

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(b) Final Sums.

9B.2 Provision of Bi-annual Estimate and Secured Amount Statement 9B.2.1 The Company shall provide to the User an estimate (“the Bi-annual

Estimate”) in substantially the form set out in Part 2 of Appendix M to this Construction Agreement and showing the amounts of all payments required or which may be required to be made by the User to The Company in respect of Final Sums and The Company Engineering Charges and other expenses in relation to seeking Consents referred to in Clause 2.4 of this Construction Agreement at the following times and in respect of the following periods:-

(a) forthwith on and with effect from the signing of this Construction

Agreement, in respect of the period from and including the day of signing of this Construction Agreement until the next following 31st March or 30th September (whichever shall first occur); and

(b) not less than 75 (seventy five) days (or if such day is not a Business

Day the next following Business Day) prior to each 31st March and 30th September thereafter in respect of the period of six calendar months commencing on the immediately following 1st April or 1st October (as the case may be), until this Construction Agreement shall be terminated and all sums due or which will or might fall due in respect of which security is to be provided shall have been paid.

9B.2.2 Such Bi-annual Estimate shall be accompanied by a statement (in the form

of the Secured Amount Statement set out in Part 3 of Appendix M to this Construction Agreement) (“Secured Amount Statement”) specifying the aggregate amount to be secured at the beginning of and throughout each such period.

9B.2.3 If The Company shall not provide any subsequent Bi-annual Estimate and

Secured Amount Statement by the requisite date, then the User shall at the date it is next required to have in full force and effect security and whether by renewal or replacement or otherwise in respect of the following six calendar month period nonetheless provide security in accordance with the provisions of this Construction Agreement in the same amount as the amount then in force in respect of the then current six calendar month period. Notwith-standing the foregoing, if The Company shall provide the User with any Bi-annual Estimate and Secured Amount Statement later than the date specified in Clause 9B.2.1 of this Construction Agreement, then the following shall apply. The User shall within 30 (thirty) days of receipt of the said Secured Amount Statement procure that to the extent that the amount in respect of which security has been or is to be provided pursuant to this Clause 9B.2.3 in respect of the relevant period (“the Secured Amount”) falls short of the amount stated in the Secured Amount Statement (“the

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Required Amount”) the Secured Amount shall be adjusted to the Required Amount.

9B.3 Entitlement to Estimate

If The Company is (for whatever reason) unable on any relevant date to calculate precisely any sum due or which has accrued due or in respect of which the User has a liability to The Company for payment under any of the provisions of this Construction Agreement, The Company shall be entitled to invoice the User for a sum equal to The Company’s fair and reasonable estimate of the sums due or which may become due or in respect of which the User has a liability to The Company for payment. The Company shall also be entitled to send the User further invoices for such sums not covered in previous invoices. The User shall pay The Company all sums so invoiced by The Company.

9B.4 Demands not Affected by Disputes

It is hereby agreed between The Company and the User that if there shall be any dispute between the User and The Company as to:-

9B.4.1 any amount certified by The Company in any Secured Amount Statement as requiring at any time and from time to time to be secured; or

9B.4.2 the fairness and reasonableness of The Company’s estimate; or 9B.4.3 whether there has been an Event of Default (under the Construction

Agreement or the CUSC), or 9B.4.4 the lawfulness or otherwise of any termination or purported termination of this

Construction Agreement such dispute shall not affect the ability of The Company to make demands

pursuant to the security arrangement to be provided pursuant to Clause 9B.1 of and Appendix M to this Construction Agreement and to recover the amount or amounts payable thereunder, it being acknowledged by the User that but for such being the case The Company’s security would be illusory by reason of the period of validity of the relevant security being likely to expire or capable of expiring before the final resolution of such dispute. The User accordingly covenants with The Company that it will not take any action, whether by way of proceedings or otherwise, designed or calculated to prevent, restrict or interfere with the payment to The Company of any amount secured under the security arrangement nor seek nor permit nor assist others to do so.

9B.5 If there shall be any dispute as mentioned in Clause 9B.4 of this

Construction Agreement the same shall, whether The Company shall have

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terminated this Construction Agreement and recovered or sought to recover payment under the security arrangement or not, and without prejudice to The Company’s right to recover or seek to recover such payment, be referred in the case of Clauses 9B.4.1 and 9B.4.2 to the Independent Engineer (and, for the avoidance of doubt the provisions of this Construction Agreement relating to the Independent Engineer for the purposes of this Clause 9B.5 shall survive termination) and, in the case of Clauses 9B.4.3 and 9B.4.4 be dealt with by referral to arbitration in accordance with the Dispute Resolution Procedure.

Final Sums 9B.6 Within 60 days of the date of termination of this Construction Agreement

The Company shall:

(a) furnish the User with a further statement showing a revised estimate of Final Sums and will provide as soon as practicable evidence of such costs having been incurred; and

(b) by written notice to the User inform the User of all capital items which

cost The Company in excess of £10,000 and in relation to which an amount on account of Final Sums shall have been paid and whether The Company (1) wishes to retain the said capital items or (2) dispose of them.

9B.7.1 In respect of all capital items which The Company wishes to retain (other

than those which have been, or are proposed to be installed as a replacement for Transmission Plant and Transmission Apparatus) The Company shall forthwith reimburse to the User the amount paid by the User on account of Final Sums in respect of the said capital items (including without limitation the amount paid on account of the design, purchase, installation and testing of the said capital item and also associated construction works and interest charges) together with interest calculated thereon on a daily basis from the date of termination of this Construction Agreement to the date of payment at Base Rate for the time being and from time to time provided that in the event that The Company wishes to retain any capital item which has been installed but wishes to remove it to storage or to another site then it shall only reimburse to the User the cost of the capital item and not the costs of such installation and shall deduct from any reimbursement due to the User the costs of removal and/or storage.

9B.7.2 In respect of all capital items which The Company wishes to dispose (other

than those which have been, or are proposed to be installed as a replacement for Transmission Plant and Transmission Apparatus) it shall forthwith (and subject to The Company obtaining the consent of the Authority under Standard Condition B3 of the Transmission Licence if required and\or subject to any Relevant Transmission Licensee obtaining the consent of the Authority under Standard Condition B3 of its transmission licence) sell or

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procure the sale of the said capital item on an arms-length basis as soon as reasonably practicable. Forthwith upon receipt of the sale proceeds The Company shall pay to the User the proceeds received from any such sale together with interest thereon calculated on a daily basis from the date of termination to the date of payment at Base Rate for the time being and from time to time less any reasonable costs associated with the sale including the costs and expenses reasonably incurred and/or paid and/or which The Company is legally bound to pay on removing the capital item, any storage charges and any costs reasonably incurred by The Company in respect of reinstatement associated with removal of the capital item. The Company shall provide the User with reasonably sufficient evidence of all such costs and expenses having been incurred. If the Authority does not agree to the disposal of the capital item the capital item shall be retained by The Company and The Company shall reimburse the User the notional current market value in situ of the said capital item as between a willing buyer and a willing seller as agreed between the parties and failing agreement as determined by reference to arbitration in accordance with the Dispute Resolution Procedure together with interest thereon calculated on a daily basis from the date of termination of this Construction Agreement to the date of payment at Base Rate for the time being and from time to time.

9B.7.3 As soon as reasonably practicable after termination of this Construction

Agreement The Company shall provide the User with a statement of and invoice for Final Sums together with evidence of such costs having been incurred and/or paid and/or having been committed to be incurred. If the Final Sums are greater than the payments made by the User in respect of The Company’s estimate(s) of Final Sums the User shall within 28 days of the said statement and invoice prepared by The Company pay to The Company the additional payments due by the User together with interest calculated thereon on a daily basis at Base Rate for the time being and from time to time from the date of previous payment(s) sums equal to The Company’s estimate of Final Sums to the date of the statement of and invoice for Final Sums. If the Final Sums is less than the payments made by the User in respect of The Company’s estimate of Final Sums paid by the User following termina-tion of this Construction Agreement The Company shall forthwith pay to the User the excess paid together with interest on a daily basis at Base Rate for the time being and from time to time from the date of payment of the fair and reasonable estimate of Final Sums to the date of reimbursement by The Company of the said excess paid.

9B.8 The obligations to provide security under this Clause 9 B shall continue until

either all sums due under this Construction Agreement have been paid in full or security arrangements have been put in place by the User under the Bilateral Connection Agreement in accordance with Section 2 Part III of the

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CUSC. Until such time as the security arrangements are put in place in accordance with Section 2 Part III of the CUSC The Company shall be entitled to call upon the security put in place under the terms of this Construction Agreement for payment of Termination Amounts where due under the provisions of the CUSC.

10. EVENT OF DEFAULT

As before alternate provisions apply depending whether or not the User does (10A) or does not (10B) meet The Company's required credit rating on signing this Construction Agreement

10A. Event of Default

Any of the following events shall constitute an Event of Default:- 10A.1 If the User fails to provide or procure that there is provided to The Company

within the requisite time any relevant security satisfactory to The Company, or to enter into the Amending Agreement pursuant to Clauses 9A.1 or 10A.3 of this Construction Agreement.

10A.2 If having entered into the Amending Agreement and having provided

security satisfactory to The Company pursuant to Clauses 9A.1 and 10A.3 of this Construction Agreement.

(a) The User thereafter fails to provide or procure that there is provided to

The Company or at any time fails to maintain or procure that there is maintained in full force and effect the relevant security arrangement required by this Construction Agreement as varied by the Amending Agreement or to revise or renew such security with the required replacement security or to maintain or procure that there is maintained in full force and effect any such renewed, revised or substituted security as so required, or if the User shall otherwise be in breach of any of its obligations in respect of security under this Construction Agreement as varied by the Amending Agreement;

(b) The User or any shareholder (whether direct or indirect) of the User or

any other party who may at any time be providing security to The Company pursuant to the requirements of this Construction Agreement as varied by the Amending Agreement takes any action whether by way of proceedings or otherwise designed or calculated to prevent, restrict or interfere with the payment to The Company of any amount so secured whether or not there shall be a dispute between the parties;

(c) Any party who may at any time be providing security to The Company

pursuant to the provisions of this Construction Agreement as varied

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by the Amending Agreement fails to pay to The Company any sum demanded pursuant thereto.

10A.3 If (i) There is a material adverse change in the financial condition of the

User such as to give The Company reasonable grounds for concluding that there is a substantial probability that the User will default in the payment of any sums due or to become due to The Company within the next following period of twelve (12) months in terms of or on termination of this Construction Agreement; or

(ii) an event of default has occurred under any banking arrangements (as such may be more particularly described in the Bilateral Connection Agreement) (an event of default being any event described as such in the banking arrangements)] put in place by the User in connection with a project for which security under this Clause 10A is required by The Company and as a result the banks who are party to such banking arrangement have taken steps to declare the principle of the advances under such arrangement immediately due and payable; or

(iii) any other indebtedness of the User for the repayment of borrowed money (in a principal outstanding amount of not less than £1,000,000 pounds sterling or such greater amount specified in the Bilateral Connection Agreement) has become due and payable prior to the stated date of maturity thereof by reason of any default or breach on the part of the User and the amount in question has not been paid by the User or refinanced within a period of 28 days following the date upon which it was so declared due and payable

and in (i) or (ii) or (iii) the User fails, within a period of 7 (seven) days following the date on which The Company gives the User notice in writing of one or other of the above events occurring to provide The Company with such security as The Company shall require to cover the User’s payment obligations to The Company arising in the event of or which have arisen prior to termination of this Construction Agreement and which arise under this Construction Agreement. The security to be provided shall be in a form satisfactory to The Company in accordance with its then current policy and procedures and in such amount as The Company shall specify to the User in the aforesaid notice. The User shall if required by The Company, in addition to providing the requisite security, within a period of 30 days following the date on which The Company gives the User such notice enter into an Amending Agreement. Such Amending Agreement shall contain such provisions in relation to the User’s obligations to provide and maintain security as shall be consequential upon the requirement for security having arisen and shall be in such form as The Company shall reasonably require in line with The Company’s then current provisions to the like effect in its connection agreements with other parties.

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Provided that (in relation to paragraphs (i) or (ii) or (iii) above) if at anytime after the putting in place of security under Clause 10A.3 the User shall produce to The Company evidence to The Company’s reasonable satisfaction that there is not a substantial probability of the User not being able to make payment to The Company of such sums within the next following period of twelve (12) months, The Company shall not require the User to provide the aforesaid security and shall release any such security then in place. This waiver is without prejudice to The Company’s right to require security at any time thereafter in the event of any of the circumstances set out in paragraph (i) and/or (ii), and/or (iii) subsequently occurring.

10A.4 Any of the Events of Default in Paragraph 5.3.1 of the CUSC have occurred

and are occurring.

Or 10B Event of Default

Any of the following events shall constitute an Event of Default:-

10B.1 If (i) an event of default has occurred under any banking arrangements (as

such may be more particularly described in the Bilateral Connection Agreement) (an event of default being any event described as such in the banking arrangements) put in place by the User in connection with a project for which security under this Clause 10B is required by The Company and as a result the banks who are party to such banking arrangement have taken steps to declare the principle of the advances under such arrangement immediately due and payable; or

(ii) there is a material adverse change in the financial condition of the User such as to give The Company reasonable grounds for concluding that there is a substantial probability that the User will default in the payment of any unsecured sum due or to become due to The Company within the next following period of 12 (twelve) months in terms of or on termination of this Construction Agreement;

(iii) any other indebtedness of the User for the repayment of borrowed money (in a principal amount of not less than £1,000,000 pounds sterling or such greater amount specified in the Bilateral Connection Agreement) has become due and payable prior to the stated date of maturity thereof by reason of any default or breach on the part of the User and the amount in question has not been paid by the User or refinanced within a period of 28 days following the date upon which it was so declared due and payable

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and in either (i) or (ii) or (iii) the User fails:-

(1) within a period of 14 (fourteen) days following the date on which The Company gives notice of such circumstances to provide to The Company a cash deposit in a Bank Account, a Performance Bond or Letter of Credit (as defined in Appendix M) in favour of The Company and Valid (as defined in Appendix M) at least up to the last day of the Financial Year in which the event occurs for such amount representing The Company’s reasonable estimate of all unsecured sums to become due to The Company in the period up to the end of the Financial Year in which the event occurs such sum to be specified in the said notice; or

(2) to subsequently provide such cash deposit or renew such

Performance Bond or Letter of Credit (or such renewed Performance Bond or Letter of Credit provided under this paragraph) not less than 45 days prior to its stated expiry date for such amount representing The Company’s reasonable estimate of the unsecured sums to become due to The Company in the next following Financial Year valid at least up to the last day of the next following Financial Year and to continue the provision of cash deposit a Performance Bond or Letter of Credit in a similar manner, to such estimate of unsecured sums.

Provided that regarding (i) or (ii) or (iii) if at any time after the putting in place of security under this Clause 10B.1 the User shall provide to The Company evidence to The Company’s reasonable satisfaction that there is not a substantial probability of the User being unable to make payment to The Company of any unsecured sums within the next following period of twelve (12) months, The Company shall not require the User to provide the aforesaid security and shall release any such security then in place. This waiver is without prejudice to The Company’s right to return security at any time thereafter in the event of any of the circumstances set out in paragraph (i) and/or (ii) and/or (iii) in this Clause 10B.1 subsequently occurring.

10B.2 If the User fails to provide or procure that there is provided to The Company

or at any time fails to maintain or procure that there is maintained in full force and effect the relevant security arrangement required under Clauses 9B.1 or 10B.1 of and Appendix M to this Construction Agreement or to renew or revise such security or to substitute any security with the required replacement security or to maintain or procure that there is maintained in full force and effect any such renewed, revised or substituted security as so required or if the User is otherwise in breach of any of its obligations under Appendix M to this Construction Agreement.

10B.3 If the User or any shareholder (whether direct of indirect) of the User takes any action whether by way of proceedings or otherwise designed or

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calculated to prevent restrict or interfere with the payment to The Company of any amount so secured or seeks or permits or assists others to do so, whether or not there shall be a dispute between the parties.

10B.4 If any party who may at any time be providing or holding security in favour of The Company pursuant to Clauses 9B.1 or 10B.1 of and Appendix M to this Construction Agreement fails to pay The Company any sum demanded in any Notice of Drawing (as defined in Appendix M) pursuant thereto.

10B.5 Any of the Events of Default in Paragraph 5.3.1 of the CUSC have occurred and are occurring.

11. TERMINATION ON EVENT OF DEFAULT

11.1 Once an Event of Default pursuant to Clause 10 has occurred and is

continuing The Company may give notice of termination to the User whereupon this Construction Agreement shall forthwith terminate and The Company shall disconnect all the User’s Equipment at the Connection Site and:

(a) the User shall remove any of the User’s Equipment on, in relation to

Connection Sites in England and Wales, The Company’s or, in relation to Connection Sites in Scotland, Relevant Transmission Licensee's land within 6 months of the date of termination or such longer period as may be agreed between The Company or the Relevant Transmission Licensee (as appropriate) and the User; and

(b) in the case of Connection Sites in England and Wales, The Company shall remove and, in the case of Connection Sites in Scotland, The Company shall procure that the Relevant Transmission Licensee removes, any Transmission Connection Assets on the User’s land within 6 months of the date of termination or such longer period as may be agreed between The Company or the Relevant Transmission Licensee (as appropriate) and the User.

11.2 The User shall (notwithstanding any longer time for payment which but for such termination the User may have for payment pursuant to this Construction Agreement) within 14 days from the date of termination pay to The Company all amounts already due and owing on the date this Construction Agreement so terminates and if this Construction Agreement terminates prior to the Charging Date the User shall be liable forthwith on the date this Construction Agreement so terminates to pay to The Company:-

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(1) a sum equal to all liabilities arising under Clause 2.4 of this Construction Agreement which have not yet been invoiced by The Company to the User; and

(2) a sum equal to The Company’s fair and reasonable estimate of Final

Sums,

such payments in each case to be made within 14 days of the date of The Company’s invoice(s) in respect thereof subject to adjustment in respect of The Company’s estimate of Final Sums in accordance with Clause 9A.3.3. or 9B.7.3.

12. TERM

12.1 Subject to the provisions for earlier termination set out in the CUSC this Construction Agreement shall continue until terminated in accordance with Clause 2.5, 2.6, 4.8 or 11 hereof.

12.2 In addition this Construction Agreement shall terminate upon termination of the associated Bilateral Connection Agreement and in the event that this is prior to the Charging Date the User shall in addition to the amounts for which it is liable under Clause 2.4 hereof be liable to pay to The Company Final Sums and the provisions of Clause 11 shall apply.

12.3 The associated [Bilateral Connection Agreements or Agreement to Vary the Bilateral Connection Agreement] will automatically terminate upon termination of this Construction Agreement prior to the Charging Date.

12.4 Any provisions for payment shall survive termination of this Construction Agreement.

13. CUSC

The provisions of Sections 6.6 (Payment), 6.14 (Transfer and Subcontracting), 6.15 (Confidentiality), 6.18 (Intellectual Property), 6.19 (Force Majeure), 6.24 (Counterparts), 6.20 (Waiver), 6.21 (Notices), 6.22 (Third party Rights), 6.23 (Jurisdiction), 6.25 (Governing Law), 6.26 (Severance of Terms), 6.27 (Language) inclusive of the CUSC shall apply to this Construction Agreement as if set out in this Construction Agreement.

14. DISPUTES

Except as specifically provided for in this Construction Agreement any dispute arising under the terms of this Construction Agreement shall be referred to arbitration in accordance with the Dispute Resolution Procedure.

15. VARIATIONS

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15.1 Subject to Clause 15.2 and 15.3 below, no variation to this Construction Agreement shall be effective unless made in writing and signed by or on behalf of both The Company and the User.

15.2 The Company and the User shall effect any amendment required to be made to this Construction Agreement by the Authority as a result of a change in the CUSC or the Transmission Licence, an order or direction made pursuant to the Act or a Licence, or as a result of settling any of the terms hereof. The User hereby authorises and instructs The Company to make any such amendment on its behalf and undertakes not to withdraw, qualify or revoke such authority or instruction at any time.

15.3 The Company has the right to vary Appendices in accordance with Clauses 2.3, 2.11 and 7.4 and Paragraph 6.9 of the CUSC.

16. RESTRICTIVE TRADE PRACTICES ACT

Any restriction or information provision (as each of those terms are defined or construed in Section 43(1) of the Restrictive Trade Practices Act 1976) contained in this Construction Agreement shall not take effect or shall cease to have effect:-

(a) if a copy of this Construction Agreement is not provided to the Department of Trade and Industry (“DTI”) within 28 days of the date of this Construction Agreement; or

(b) if, within 28 days of the provision of that copy to the DTI, the DTI gives notice of objection to the party providing it.

IN WITNESS WHEREOF the hands of the duly authorised representatives of the parties hereto at the date first above written SIGNED BY ) [name] ) for and on behalf of ) National Grid Electricity Transmission plc ) SIGNED BY ) [name] ) for and on behalf of ) [User] )

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APPENDIX [J]

CONSTRUCTION PROGRAMME

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APPENDIX [H]

TRANSMISSION REINFORCEMENT WORKS

[where under Connect and Manage Arrangements Part 1 Enabling Works Part 2 Wider Transmission Reinforcement Works]

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APPENDIX [L]

INDEPENDENT ENGINEER Company: Connection site: Type: The Independent Engineer will be a Member of the Association of Consulting Engineers (ACE) and shall be agreed between the parties within 120 days of execution of this Construction Agreement or such other period as may be agreed between the parties. Failing agreement it shall be referred to the President of the Institution of Electrical Engineers who shall nominate the Independent Engineer.

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APPENDIX [K]

LIQUIDATED DAMAGES

Company: Connection site: Type: The amount of Liquidated Damages payable by The Company to the User pursuant to this Construction Agreement shall be: Liquidated Damages under Clause [4] of this Construction Agreement shall be calculated on a daily basis at a rate of £XXXXX per week subject to the limit that the total Liquidated Damages payable by The Company to the User under this Clause shall not exceed £XXXXX.

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APPENDIX [G]

TRANSMISSION CONNECTION ASSET WORKS

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APPENDIX [B] [Part 1]

ONE OFF WORKS

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APPENDIX [M] PART 1 SECURITY ARRANGEMENT 1. DEFINITIONS

In this Appendix M, the following terms have the meanings set out next to

them:-

“Bi-annual Estimate” means an estimate pursuant to Clause [9B.2.1] of

this Construction Agreement of all payments to be

made or which may be required to be made by the

User in any relevant period, such estimate to be

substantially in the form set out in Part 2 of this

Appendix M;

“Bank Account” means a separately designated bank account in the

name of The Company at such branch of Barclays

Bank PLC, or such branch of any other bank, in the

City of London as is notified by The Company to the

User, bearing interest from (and including) the date

of deposit of principal sums to (but excluding) the

date of withdrawal of principal sums from such

account, mandated for withdrawal of principal solely

by The Company against delivery of a Notice of

Drawing for the amount demanded therein and

mandated for the transfer of any interest accrued to

the Bank Account to such bank account as the User

may specify;

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“Letter of Credit" means an irrevocable standby letter of credit in a

form reasonably satisfactory to The Company but in

any case expressed to be governed by the Uniform

Customs and Practice for Documentary Credits

1993 Revision ICC Publication No. 500 or such

other form as may be reasonably satisfactory to The

Company and allowing for partial drawings and

providing for the payment to The Company on

demand forthwith on and against The Company’s

delivery to the issuer thereof of a Notice of Drawing

of the amount demanded therein;

“Notice of Drawing” means a notice of drawing signed by or on behalf of

The Company substantially in the form set out in

Part 4 of this Appendix M;

“Performance Bond” means an on first demand without proof or

conditions irrevocable performance bond or

performance guarantee executed as a deed in a

form reasonably satisfactory to The Company but in

any case allowing for partial drawings and providing

for the payment to The Company on demand

forthwith on and against The Company’s delivery to

the issuer thereof of a Notice of Drawing of the

amount demanded therein;

“Qualified Bank” means a City of London branch of a bank, its

successors and assigns, which has throughout the

validity period of the Performance Bond or Letter of

Credit it issues in favour of The Company, a rating

of at least A- in Standard and Poor’s long term debt

rating or A3 in Moody’s long term debt rating

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provided that such bank is not during such validity

period put on any credit watch or any similar credit

surveillance which gives The Company reasonable

cause to doubt that such bank may not be able to

maintain the aforesaid rating throughout the validity

period and no other event has occurred which gives

The Company reasonable cause to have such

doubt;

“Qualified Company” a company which is a public company or a private company within the meaning of section 1(3) of the Companies Act 1985 and which is either :

(a) a shareholder of the User or any holding company of such shareholder or

(b) any subsidiary of any such holding company, but only where the subsidiary

(i) demonstrates to The Company’s satisfaction that it has power under its constitution to give a Performance Bond other than in respect of its subsidiary;

(ii) provides an extract of the minutes of a meeting of its directors recording that the directors have duly concluded that the giving of the Performance Bond is likely to promote the success of that subsidiary for the benefit of its members;

(iii) provides certified copies of the authorisation by every holding company of the subsidiary up to and including the holding company of the User, of the giving of the Performance Bond,

(the expressions “holding company” and

“subsidiary” having the respective meanings

assigned thereto by section 736, Companies Act

1985 as supplemented by section 144(3),

Companies Act 1989) and which has throughout the

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validity period of the Performance Bond it gives in

favour of The Company, a rating of at least A- in

Standard and Poor’s long term debt rating or A3 in

Moody’s long term debt rating or such lesser rating

which The Company may in its absolute discretion

allow by prior written notice given pursuant to a

resolution of its board of directors for such period

and on such terms as such resolution may specify

provided that such company is not during such

validity period put on any credit watch or any similar

credit surveillance procedure which gives The

Company reasonable cause to doubt that such

company may not be able to maintain the aforesaid

rating throughout the validity period of the

Performance Bond and no other event has

occurred which gives The Company reasonable

cause to have such doubt;

“Secured Amount means a statement accompanying the Bi-annual

Statement” Estimate setting out the amount of the User’s

Obligation based on figures contained in the Bi-

annual Estimate being the amount for which security

shall be provided to The Company pursuant to

Clause 9B of this Construction Agreement;

“User’s Obligation” means the User’s obligation to pay under this

Construction Agreement:-

(i) all amounts in respect of which the User has a

liability to pay to The Company pursuant to

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Clause 2.4 of this Construction Agreement

Agreement;

(ii) Final Sum

“Valid" means valid for payment to be made thereunder

against delivery of a Notice of Drawing given within

the period stated therein.

2. SECURITY REQUIREMENT

The User’s Obligation shall be secured by any one of the following:-

2.1 A Performance Bond or Letter of Credit from a Qualified Bank for the

amount stated in the Secured Amount Statement as the estimated

amount of the User’s Obligation to be secured, such Performance

Bond or Letter of Credit to be Valid for at least the period stated in such

Secured Amount Statement and to be renewed periodically where

applicable in the manner stated in paragraph 3.3 of this Appendix M; or

2.2 A cash deposit in a Bank Account at least for the amount stated in the

Secured Amount Statement as the estimated amount of the User’s

Obligation to be secured, such cash deposit to be increased or

reduced periodically where applicable in the manner stated in

paragraph 3.4 of this Appendix M; or

2.3 A Performance Bond from a Qualified Company for the amount stated

in the Secured Amount Statement as the estimated amount of the

User’s Obligation to be secured, such Performance Bond to be Valid

for at least the period stated in such Secured Amount Statement and to

be renewed periodically where applicable in the manner stated in

paragraph 3.3 of this Appendix M.

3. GENERAL PROVISIONS

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3.1 Any Notice of Drawing to be delivered to Barclays Bank PLC or any

other bank at which the Bank Account shall have been opened or a

Qualified Bank or a Qualified Company may be delivered by hand, by

post or by facsimile transmission.

3.2 If the User becomes aware that the bank issuing the Performance

Bond or Letter of Credit ceases to be a Qualified Bank or that the

company giving the Performance Bond ceases to be a Qualified

Company, the User shall so notify The Company in writing as soon as

it becomes so aware. If The Company becomes aware that the bank

issuing the Performance Bond or Letter of Credit ceases to be a

Qualified Bank or that the company giving the Performance Bond

ceases to be a Qualified Company, The Company may notify the User

to that effect in writing. Where the bank or the company so ceases to

be either a Qualified Bank or a Qualified Company (as the case may

be) as a consequence of The Company having reasonable cause to

doubt the continued rating of the said bank or company, such notice

shall be accompanied by a statement setting out The Company’s

reasons for having such doubt. The User shall within 21 days of the

giving of such notice by The Company or the User whichever is the

earlier provide a replacement Performance Bond and/or Letter of

Credit from a Qualified Bank or Qualified Company, as the case may

be, and/or provide a cash deposit in the required amount in a Bank

Account. From the date the replacement Performance Bond or Letter

of Credit or Bank Account cash deposit is effectively and

unconditionally provided and Valid, The Company will consent in

writing to the security which it replaces being released.

3.3 The following provisions shall govern the issuance, renewal and

release of the Performance Bond or Letter of Credit:-

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3.3.1 The Performance Bond or Letter of Credit shall be Valid initially from

the signing of this Construction Agreement at least to and including the

following 31st March or 30th September whichever is the earlier date.

Such Performance Bond or Letter of Credit shall be for an amount not

less than that stated in the Secured Amount Statement as the amount

of the User’s Obligation to be secured during the period specified in the

Secured Amount Statement.

3.3.2 On a date which is at least 45 days (or if such day is not a Business

Day then on the immediately preceding Business Day) before the next

following 31st March or 30th September whichever is the earlier date

such Performance Bond or Letter of Credit shall be renewed so as to

be Valid for not less than 6 months commencing from the immediately

following 1st April or 1st October (as the case may be). Such renewed

Performance Bond or Letter of Credit shall be for an amount not less

than the amount of the User’s Obligation stated in the Secured Amount

Statement as the amount to be secured during the period that such

renewed Performance Bond or Letter of Credit shall be Valid.

3.3.3 Thereafter, the renewed Performance Bond or Letter of Credit shall be

further renewed in like manner every 6 months.

3.4 The following provisions shall govern the maintenance of cash deposits

in the Bank Account:-

3.4.1 The amount of the cash deposit to be maintained in the Bank Account

shall be maintained from the date of this Construction Agreement at

least to and including the following 31st March or 30th September,

whichever is the earlier date. Such cash deposit shall be in an amount

as stated in the Secured Amount Statement as the amount of the

User’s Obligation to be secured during the period stated in the Secured

Amount Statement.

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3.4.2 If the amount stated in the Secured Amount Statement as the amount

of the User’s Obligation to be secured from the following 1st April to

30th September or from the following 1st October to 31st March (as the

case may be) is an amount greater than the amount then secured, the

cash deposit in the Bank Account shall be increased to such greater

amount on a date which is 45 days before the following 31st March or

30th September (as the case may be) which immediately precedes the

commencement of the relevant above mentioned period.

3.4.3 If such amount stated in the Secured Amount Statement is smaller

than the amount then secured, the cash deposit in the Bank Account

shall not be reduced to the amount so stated until the expiry of 7 days

after the next following 31st March or 30th September (as the case

may be) (“the Release Date”).

3.4.4 The sum equal to the amount of reduction in the cash deposit in the

Bank Account shall be paid by The Company to the User from the

Bank Account on the Release Date.

3.4.5 Any interest accruing to the Bank Account shall be for the account of

and belong to the User absolutely, and The Company agrees to take

any steps required to be taken by it for the release from the Bank

Account and payment to the User of such interest as soon as the same

shall have been credited to the Bank Account and The Company shall

have received notice of such credit.

3.5 Notwithstanding any provision aforesaid:-

3.5.1 The User may provide different securities to The Company at any one

time, each securing a different amount, provided that the aggregate

amount secured by such securities shall be not less than the

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aggregate amount required to be secured pursuant to the Secured

Amount Statement for any period specified therein.

3.5.2 The User may upon the expiry of at least 14 days prior written notice to

The Company, substitute one type of security for another provided that

unless The Company shall otherwise agree in writing such substituted

security must be Valid from 1st April or 1st October (as the case may

be) and committed at least 45 days before the immediately preceding

31st March or 30th September (as the case may be) in the following

manner:-

(a) where a Performance Bond or a Letter of Credit is to substitute

for other securities, it must be issued or given at least 45 days

before such immediately preceding 31st March or 30th

September (as the case may be).

(b) where a cash deposit in a Bank Account is to substitute for other

securities, it must be deposited into the Bank Account at least

45 days before such immediately preceding 31st March or 30th

September (as the case may be).

3.5.3 Upon request by the User to The Company, securities substituted in

the aforesaid manner shall, providing the substitute security shall be

Valid, be released on the following 1st April or 1st October (as the case

may be). However, where the amount required by the Secured

Amount Statement to be secured for any period is less than the

amount required to be secured in the preceding period, the substituted

security shall not be released until 7 days after the then following 31st

March or 30th September (as the case may be).

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PART 2 BI-ANNUAL ESTIMATE FOR CONSTRUCTION AGREEMENT DATED [ ]

Amount due and amount which will or might fall due for the period commencing on and including [ ] and ending on and

including [ ] in respect of which security is

required ___________________________________

1. The Company Engineering Charges & expenses

for obtaining Consents pursuant to to Clause 2.4

2. Final Sums [3. One Off Charge]

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PART 3 SECURED AMOUNT STATEMENT CONSTRUCTION AGREEMENT DATED [ ]

Amount in which security is required for the period

commencing on and including [ ] and ending on and

including [ ]

______________________________

User’s Obligation We hereby certify that the amount to be secured in respect of the User’s Obligation is as stated above in respect of the named period. for and on behalf of NATIONAL GRID ELECTRICITY TRANSMISSION PLC Duly authorised officer

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PART 4 NOTICE OF DRAWING To [ ] Bank/Public Limited Company/Limited copy to: [date] Dear Sirs, RE: CONSTRUCTION AGREEMENT DATED [ ]

PERFORMANCE BOND NO./DATED [ ]/LETTER OF CREDIT NO. [ ]/BANK ACCOUNT NO. [ ] (“THE SECURITY”)

______________________________________________________________ We refer to the above Security in our favour. We hereby demand immediate payment thereunder in the amount of £[ ]. We require payment to be made by telegraphic transfer to:- Bank plc Address: Sort Code: Account Name: National Grid Electricity Transmission plc Account No: Yours faithfully, for and on behalf of NATIONAL GRID ELECTRICITY TRANSMISSION PLC Duly authorised officer

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APPENDIX [N]

THIRD PARTY WORKS

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APPENDIX [P]

DEVELOPER’S DATA Power Station Location of Power station Connection Site (GSP) Site of Connection Agreement Reference [Insert details equivalent to data listed in part 1 of the planning code] Anticipated date when Power Station’s connection to\use of the Distribution System will be energised.

END OF SCHEDULE 2 EXHIBIT 3

Documents

CUSC Schedule 2 Exhibit 3, Construction agreement